Executive Summary:
This document summarizes the Indian government's initiatives regarding the financial autonomy of Panchayats, administrative capacity enhancement, digital tool utilization, transparency measures, empowerment schemes, innovation plans, and responses to issues like pseudoproxy leadership. It outlines steps taken by the Ministry of Panchayati Raj (MoPR) in response to questions raised in Lok Sabha Starred Question No. 132, answered on July 29, 2025. The report details various programs, collaborations, and actions aimed at strengthening Panchayati Raj Institutions (PRIs).
Key Points / Main Content:
Financial Autonomy of Panchayats:
* States hold the primary responsibility for devolving finance, functions, and functionalities to Panchayats.
* Central Finance Commission grants to Panchayats have significantly increased, from Rs. 176 in the 13th Finance Commission to Rs. 674 in the 15th Finance Commission (per capita per annum allocation).
* MoPR collaborates with IIMA to develop specialized modules for Panchayats on generating Own Sources Revenue (OSR).
* Studies were conducted by NCAER and NIPFP to assess the potential and challenges in OSR mobilization, with reports shared with States for implementation.
* The "Atma Nirbhar Panchyats Visesh Puraskar" under National Panchayat Awards has been instituted to encourage OSR mobilization.
Administrative Capacity Enhancement:
* Training programs are conducted continuously under the RGSA scheme by SIRDPRs, NIRDPR, IIM, and DPRCs for Elected Representatives (ERs) of PRIs.
* Thematic workshops on health, education, gender parity, environment protection, social security, and good governance are conducted to enhance the capacity of PRI members.
Digital Tools and E-Governance:
* The ePanchayat Mission Mode Project promotes transparency and efficiency through digital platforms.
* The eGramSwaraj application facilitates digital planning, accounting, monitoring, and online payments.
* Integration of eGramSwaraj with PFMS enables real-time payments, and with GeM to bring transparency to Panchayat procurement.
* Applications like Meri Panchayat and Panchayat NIRNAY enhance transparency in Panchayat governance.
* AuditOnline is developed for online audits of Panchayat accounts and financial management.
Empowerment of Weaker Sections and Women:
* The RGSA scheme provides training to Elected Representatives, including Women Elected Representatives (WER) and representatives from weaker sections.
* Specialized Training Modules are available to States/UTs for capacity building of WER of PRIs.
Innovation and Model Projects:
* The RGSA scheme supports Economic Development Income Enhancement Projects through viability gap funding for micro projects like ecotourism and cultural heritage sites.
Addressing Pseudoproxy Leadership:
* MoPR is addressing pseudoproxy leadership in PRIs, including the issue of "Sarpanch Pati."
* An Advisory Committee submitted recommendations with over 70 actionable strategies, and a Facilitation Committee oversees implementation.
Impact Analysis
States:
* Impact: Required to devolve finance, functions, and functionalities to Panchayats. They are also expected to implement recommendations from studies on OSR mobilization.
* Action Required: Implement recommendations from studies on OSR, take corrective actions based on devolution index, and facilitate training programs for PRI members.
Panchayats:
* Impact: Benefit from increased financial devolution through Central Finance Commission grants. They are expected to generate own sources of revenue and utilize digital tools for governance.
* Action Required: Generate OSR, participate in training programs, utilize digital platforms like eGramSwaraj, Meri Panchayat, and AuditOnline.
Elected Representatives (ERs) of PRIs (including WER):
* Impact: Benefit from training programs and workshops to enhance their governance capabilities and leadership roles.
* Action Required: Participate in training programs and workshops, effectively deliver roles and responsibilities at the grassroots level, and utilize specialized training modules.
Rural Citizens:
* Impact: Benefit from increased transparency and accountability in Panchayat governance through digital platforms and awareness activities.
* Action Required: Engage with Panchayat activities through platforms like Meri Panchayat and participate in awareness programs.
Key Entities Referenced
Panchayati Raj Institutions: Local self-government institutions at the village or rural level in India.
Ministry of Panchayati Raj: The ministry responsible for governance and development of Panchayati Raj institutions in India.
Central Finance Commission: A constitutional body in India that recommends measures to improve the finances of states and local bodies, including Panchayats.
Rashtriya Gram Swaraj Abhiyan RGSA: A Centrally Sponsored Scheme aimed at developing the governance capabilities of Panchayati Raj Institutions.
Digital India: A campaign launched by the Government of India to ensure that government services are available to citizens electronically by improved online infrastructure and by increasing Internet connectivity.
eGramSwaraj: An application that facilitates digital planning, accounting, monitoring, and online payments at the Panchayat level.
National Panchayat Awards: Awards conferred to Panchayats in India for their outstanding performance and contribution to rural development.
Article 243H of the Constitution of India: Article of the Constitution of India that empowers the legislature of a State to authorize a Panchayat to levy, collect, and appropriate taxes, duties, tolls, and fees.
GOVERNMENT OF INDIA
MINISTRYOF PANCHAYATI RAJ
LOK SABHA
STARREDQUESTION NO. *132
ANSWEREDON: 29.07.2025
FINANCIAL AUTONOMYOFPANCHAYATS
*132.SMT.ROOPKUMARI CHOUDHARY:
Will the Minister of PANCHAYATI RAJ be pleasedtostate:
(a) the details of steps taken by the Government for financial autonomy of Panchayats in the
country;
(b) the details of the training programmes and regular workshops being conducted to
enhanceadministrative capacity;
(c) the present status of use of digitaltoolsande-governance-inPanchayats;
(d) the manner in which transparency and accountability in decision making process are
beingensured;
(e) the details of the schemesbeing run bythe Ministry for empowerment of weakersections
andwomen;
(f) the plansformulatedtoencourage innovationandmodel projectsinPanchayats;
(g) whether the Government has received any representations to curb pseudo/proxy
leadership in Panchayati Raj Institutions, if so, the details thereofalong with anypunitive
measures recommendedfor preventingsuch practices; and
(h) the steps taken for implementing suggestions such as Mahila Lokpal, public oath taking
andcounselling by women leaders?
ANSWER
THE MINISTER OF PANCHAYATI RAJ
(SHRIRAJIVRANJAN SINGH ALIAS LALAN SINGH)
1STATEMENTREFERRED TO IN REPLYTOPARTS (a) to (h)OFTHE LOK SABHA
STARRED QUESTION NO. 132 ANSWERED ON 29.07.2025 REGARDING
FINANCIALAUTONOMYOFPANCHAYATS
___________________________________________________________________________
(a) Panchayati Raj being a State subject, it is the sole responsibility of the States to devolve
finance, functions, andfunctionalities to the Panchayatsin such a mannerthat the Panchayats
are empowered and capable of mobilising their financial resources. As per Article 243H of
the Constitution of India, legislature of the State may, by law, authorize a Panchayat to levy,
collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure
and subject to such limits and assign to the Panchayats such taxes, duties, tolls and fees
levied and collected by the State Government for such purposes and subject to such
conditions and limits as may be specified in the law. Panchayati Raj being a State subject,
Ministry of Panchayati Raj does not maintain the data pertainingto Own Sourcesof Revenue
(OSR) of Panchayats. Furthermore, States aswell as Panchayats often do not share OSR data
relatedtoPanchayats.
However, Central Finance Commission grants are provided to the Panchayats of all tiers.
There has been huge increase in financial devolution to Panchayats as the per capita per
annum allocation of Central Finance Commission grants increased from Rs.176 in 13th
Finance Commission to Rs. 674 in 15th Finance Commission. In addition to the provision of
grantsunderthe Central FinanceCommission (Now, underFifteenthFinance Commission) to
the Rural Local Bodies (RLBs) in all the three tiers of Panchayats and Traditional Bodies in
28 States, the Government has taken the following steps to enable the Panchayats to generate
own sources of revenue tobecome financially self-reliant:
(i) Ministry of Panchayati Raj (MoPR), in collaboration of Indian Institute of Management-
Ahmedabad (IIM-A), has developed specialised modules on generation of Own Sources
Revenue (OSR) by the Panchayats and started imparting training to the State level master
trainers;
(ii) MoPR, through the National Institute of Applied Economic Research (NCAER) and
National Institute of Public Finance and Policy (NIPFP), New Delhi has got the studies
conducted to assess potential and challenges in mobilization and augmentation of OSRs by
the Panchayats with suggestions on viable financial model/s for revenue (both tax and non-
2tax) generation and shared the reports with the States for implementation of the
recommendations.
(iii) MoPR has conducted surveys on status of devolution to Panchayats and estimated the
Devolution Index that includes, inter alia, index on fiscal devolution and shared with the
Statesfor corrective action.
(iv) To encourage mobilisation and augmentation of OSRs by the Panchayats, an Award
named-Atma Nirbhar Panchyats Visesh Puraskar under National Panchayat Awards has been
instituted andPanchayats have beenawardedfor the first time inthe Award Year-2025.
(v) Various awareness activitieson best practices on OSRgenerationand sensitization of the
rural citizens and leaders have been undertaken including playing of an episode on OSR
generationonOTT platform.
(b) Under the Centrally Sponsored Scheme of Rashtriya Gram Swaraj Abhiyan (RGSA),
through the State Institute of Rural Development and & Panchayati Raj (SIRD&PRs),
National Institute of Rural Development & Panchayati Raj (NIRD&PR), Indian Institute of
Management, other organizations like District Panchayat Resource Centres (DPRCs),
varioustraining programme for the ElectedRepresentatives(ERs) of the PRIsare conducted
by the respective State Government and Central Government on a continuous basis for
building of governance capabilities and leadership roles in management, planning,
implementation, resource mobilization, etc. In addition, thematic workshops on sectors like
health, education, gender parity, environment protection and preservation, social security,
good governance etc. have been conducted for the members and functionaries of the PRIs
with sole objective of enhancing their capacity to contribute towards attainment of
sustainable goals.
(c) & (d) Under the Digital India initiative, the Ministry is implementing the e-Panchayat
Mission Mode Project scheme for promoting transparency, efficiency, and accountability at
the grassroots level governance by developing and popularising various digital platforms and
applications. The eGramSwaraj application has facilitated digital planning, accounting,
monitoring, and online payments at the Panchayat level. The integration of eGramSwaraj
with the Public Financial Management System (PFMS) enables real-time payments to
vendors and service providers, ensuring seamless fund flow and reducing delays. The
eGramSwaraj application has been integrated with the Government e-Marketplace (GeM) to
bring transparency to Panchayat procurement. Further, applications like Meri Panchayat has
endeavored to bring transparency in Panchayat Governance by making public accessible to
3information on planning, activities, and progress of works in Panchayat. Similarly, Panchayat
NIRNAY is an online application aims at bringing transparency and better management in
conductof Gram SabhasbyPanchayats. An application‘AuditOnline' hasbeendevelopedfor
online auditsof Panchayat accountsandtheirfinancialmanagement.
(e) Under the RGSAscheme, Ministry provides training to Elected Representatives including
Women Elected Representatives (WER) and representatives from the weaker sections, to
develop their governance capabilities for leadership roles and to function effectively. Women
Panchayat Leaders are trained on different aspects of rural governance in multiple training
program for effective delivery of their roles & responsibilities at grassroots level. Further,
Ministry has launched comprehensive Specialized Training Module for assisting the
States/UTs for the Capacity Building of Women Elected Representatives (WER) of
Panchayati Raj Institutions to further strengthen their leadership, managerial, communication
andnegotiationskills for effective deliveryof goodgovernance.
(f) Under the RGSA scheme, financial support in the form of viability gap funding for the
components like Economic Development & Income Enhancement Projects have been
supported for micro projects for Gram Panchayats and cluster of Gram Panchayats which
includes eco-tourism, homestay infrastructure, cultural heritage sites etc. to promote
innovative modelsinthe rural governance.
(g) & (h) The MoPR is already seized of issue of pseudo/proxy leadership in PRIs and has
been taking various awarenesses activities against the unethical practice of Sarpanch Pati.
Recently, a Public Interest Litigation (PIL) was filed before the Hon'ble Supreme Court of
India, raising the issue of Pradhan Pati. After duly hearing the case, the Hon'ble Court, in its
Order dated 06/07/2023, directed the Petitioner to seek remedy from the Ministry of
Panchayati Raj in the first instance. The MoPR had constituted an Advisory Committee to
address the issue of women Pradhans being represented by male family members. The
committee submitted its report with recommendations of over 70 actionable strategies which
have been developed, and key stakeholders have been identified for their implementation. A
Facilitation Committee has been constituted to oversee the implementation of the
recommendations.
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